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March 10, 2011
Commonwealth of PennsylvaniaOffice of Developmental Programs
Prospective Payment System Year 3 Cost Reporting Debrief
2
Agenda
Purpose of Town Hall
Overview of Year 3 Cost Report and Desk Review Statistics
Common E-help Desk Questions
Desk Review Highlights
Summary of Provider Survey Results
Proposed Year 4 Approach
Questions
3
Overview of Year 3 Cost Report and Desk Review Statistics
446 MPIs had an active ODP website user account for purposes of submitting a cost report– Of these requests, 392 MPIs attempted to upload a cost report and
382 MPIs were successful 10 MPIs attempted to upload a cost report but did not make it
past the real-time edits
536 initial cost reports were submitted by the 382 MPIs
AEs performed desk reviews on 536 initial submissions; the majority of these cost reports required resubmission– While some cost reports required only minor revisions or
clarifications, other cost reports required significant corrections due to non compliance with the cost report instructions
– AEs performed desk reviews on roughly 790 resubmissions
512 cost reports from 366 MPIs passed the desk review, while 24 cost reports from 16 MPIs failed the desk review
4
Common E-help Desk Questions
The E-help desk was staffed for provider questions from mid-July 2010 through October 15, 2010
Several questions were submitted related to the depreciation policies – Use allowances– Expensing versus depreciating fixed assets– Expenses for improvements and renovations
Other common themes included questions on how to report:– Expenses for service locations that opened or closed during the
reporting period– Transportation expenses– Units available versus units delivered– Revenue reconciliation payments and recoupments– Cost allocation methodologies and audited cost allocation plans
5
Desk Review HighlightsPurpose
For Year 3, the cost report submission process involved a standardized Excel template and upload via a website containing real-time edits– These features helped to increase the validity and consistency of
provider reporting
The second method ODP used to validate provider reporting was the desk review– The desk review was performed on cost reports to ensure provider
reporting was accurate, complete and reasonable
6
Desk Review HighlightsCommon Findings
Certification Pages– Service location codes appeared on more than one cost report– Selected procedure codes were not consistent with the procedure
codes billed through PROMISe during FY 2009/2010– Waiver census and vacancy reporting was inconsistent with the
size of the home indicated by the procedure code
Schedule A — Expense Report– Non-allowable expenses were not separately reported in Column E
In cases where a provider did not have non-allowable expenses, a comment was not included on the Comments tab
– Outlier unit costs and unexpected unit cost relationships among different levels of a given service were not accompanied by any explanations
7
Desk Review HighlightsCommon Findings
Schedule B — Income Statement– In cases where investment income, non-restricted contributions
and/or government grants were not allocated to the Waiver, an explanation was not included on Comments tab
Schedule Ds — Staff Expenses– Staff positions often reported on incorrect schedule (e.g., HR
personnel reported as Other Program Staff on D-1 instead of Administration Staff on D-3)
– CEO compensation in excess of allowable limits was not classified as non-allowable expense
– Costs for Family Living Home (FLH) stipends not properly allocated to only FLH procedure codes in Schedule A
8
Desk Review HighlightsCommon Findings
Schedule Es — Provider Depreciation and Amortization Expenses– Depreciation taken was accelerated and/or was claimed on fully
depreciated assets– Supporting depreciation schedules:
Were missing required columns of information Did not clearly tie to totals on Schedule Es Were not completed appropriately (e.g., annual depreciation
expensed did not agree with total cost divided by useful life)
Schedule F — Other Program Expenses– Lack of itemization/support provided for large expenses on Line 14:
Other– Lack of sufficient descriptions for program supply expenses
9
Desk Review HighlightsCommon Findings Schedule G — Related Party Transactions
– Insufficient information provided in cases where related party transactions were identified Supporting information was not clear as to the financial terms of the
related party transaction
Schedule H — Program Expense Allocation Procedures– Allocation methodologies were often not sufficiently explained or
supported– The allocation methodology submitted in the cost report was often not
consistent with the expense allocation across procedure codes and across other lines of business on Schedule A
All Schedules– General lack of required supporting documentation
In cases where supporting documentation was provided, it was often unclear how it tied to the expenses reported in the cost report schedules
10
Summary of Provider Survey Results
To help understand providers’ experience with the Year 3 cost reporting process, ODP conducted a survey
Who responded to the survey?– 163 provider responses were collected– Almost two-thirds of providers responding to the survey had
Consolidated and P/FDS Waiver revenue greater than $500,000– Most respondents submitted one cost report (i.e., 1 of 1) in Year 3
(81% compared to 71% in Year 2)
11
Summary of Provider Survey Results
The top three aspects of the Year 3 cost reporting process that providers found most challenging included:– Understanding the cost report instructions – Understanding how to complete each of the cost report schedules– Completing the cost report in the time allowed
Providers responded that the following cost report schedules were the most challenging to complete:– Schedule A — Expense Report– Schedule B — Income Statement– Schedules E through E-2 — Provider Depreciation and
Amortization Expenses
12
Summary of Provider Survey Results
86% of survey respondents attended the July 2010 introductory cost report webcast training session in preparation for the Year 3 cost report submission process– 31% of attendees indicated the training was effective or highly
effective– 41% were neutral– 28% indicated the training was somewhat ineffective or highly
ineffective
In preparation for Year 3, respondents indicated they were generally familiar with basic reporting requirements for each schedule– Would like training to shift focus to various targeted sessions on
complex topics (e.g., depreciation, allocation methodologies)– Also want summaries of key changes between each reporting year
13
Summary of Provider Survey Results
57% of survey respondents attended the July/August 2010 on-site cost report training session in preparation for the Year 3 cost report submission process– 41% of attendees indicated the training was effective or highly
effective– 37% were neutral– 22% indicated the training was somewhat ineffective or highly
ineffective
79% of respondents attended the September 2010 webcast training session as a follow-up to the July/August 2010 training session– 29% of attendees indicated the session was effective or highly
effective– 45% were neutral– 26% indicated the session was somewhat ineffective or highly
ineffective
14
Summary of Provider Survey Results
The top three resources used by providers when completing the cost report included:– Cost report instructions– Training materials and sample completed cost report posted on the
ODP Consulting website– Submission of questions to and holding discussions with the AE
assigned to the desk review
Although many providers also submitted questions to their Regional Fiscal Officer and the E-help mailbox, these resources were not used as often as those mentioned above
Respondents indicated that each of the above resources was beneficial and they would use them again in Year 4
15
Summary of Provider Survey Results
Respondents reported the following regarding their overall satisfaction level with the Year 3 cost reporting process:– Very satisfied: 1%– Satisfied: 25%– Neutral: 49%– Dissatisfied: 19% – Very dissatisfied: 6%
16
Summary of Provider Survey Results
The top two aspects of the Year 3 desk review process that providers found most challenging included:– Completing the resubmission request in the time allowed– Understanding the feedback received from the AE and the changes
required
Respondents reported the following regarding their overall satisfaction level with the Year 3 desk review process:– Very satisfied: 8% – Satisfied: 48%– Neutral: 28%– Dissatisfied: 13%– Very dissatisfied: 3%
17
Summary of Provider Survey Results
Although timelines for cost report and desk review submission were stated as challenges, the majority of respondents want ODP to continue with the cost report process in future years, instead of adding more services to the fee schedule
About 28% of respondents support ODP adding more services to the fee schedule in future years (compared to 25% in Year 2)– The most common services suggested to be moved to a fee
schedule (outside of the requests for all services to be on a fee schedule) included:
Respite Unlicensed Home & Community Habilitation Supported Employment
18
Proposed Year 4 ApproachProvider Comments
In addition to feedback on the Year 3 process, providers also used the survey to offer the following feedback on preferences for Year 4– Respondents expressed strong preference to keep the cost
reporting process the same from year to year Prefer no significant changes are made to the cost report
template, instructions or policies – Respondents requested clarification and detail be added to the cost
report instructions around complex topics including: Depreciation Expense Allocation
– Instead of training that provides a general overview of each schedule, respondents expressed a strong desire for Year 4 training sessions to be targeted on specific reporting topics and to highlight any changes between Year 3 and Year 4
19
Proposed Year 4 ApproachProvider Comments
Provider feedback continued:– Respondents requested cost reports be due at the same time as
the audited financial statements Note that due to the time required for reviewing cost reports and
developing rates by early May, it is not feasible to move the cost report deadline to align with the audit deadline
– Respondents requested information on which Excel version ODP would use for the Year 4 cost report template Roughly 60% of respondents anticipated using Excel 2007 or
2010 for Year 4 cost report completion, while around 40% anticipated using Excel 2003 or earlier versions
– Respondents requested that ODP consider more closely aligning the cost report instruction reporting requirements with the desk review procedure requirements
20
Proposed Year 4 ApproachPotential Changes
ODP does not anticipate making significant changes to the cost report template or instructions for Year 4– The changes will likely mainly focus on clarifying issues and
policies within the present template and instructions– No change to cost report submission or desk review timelines is
anticipated
Year 4 potential changes may include, but are not limited to:– Additional clarification in cost report instructions regarding topics
where questions were frequently asked and issues that change from Year 3 to Year 4
– Rather than providing a general overview of all schedules, a shift to targeted training sessions on complex cost report schedules and reporting policies
21
Proposed Year 4 ApproachPotential Changes
Year 4 potential changes (continued):– Continuation with Excel 2003 cost report template
In addition to the cost report website accepting files in the “.xls” format, Year 4 website may be enhanced to also accept files in the “.xlsm” and “.xlsx” format
Questions?